- 2018-09-26
Greece's economy will return to normal
In a vote in the Greek Parliament on December 18, 2017, the budget was passed with 153 votes in favor and 144 votes against. The budget still contains the fiscal austerity measures required by international creditors to help achieve the fiscal surplus target. The Budget predicts that Greece’s economic growth rate in 2018 will increase from 1.6% this year to 2.5%, and the basic fiscal surplus will increase from 2.4% of GDP this year to 3.8%. These forecasts are higher than the targets set when the country signed the third round of rescue agreements in 2015.
Greek Prime Minister Tsipras said in the parliament vote on the 2018 budget that Greece will leave behind an era that no one wants to remember. This budget indicates that Greece is about to enter the post-bailout era and the economy will return to normal. Tsipras said in a parliamentary debate: “Greece will fulfill its promise to international creditors to enter the international financial market in a stable and sustainable manner with preferential interest rates.” Tsipras said that the international financial market is currently showing Out of confidence in Greece’s future growth prospects, the government’s government bond yield has fallen to a low of 4%. Tsipras said that Greece's way out of the crisis is to achieve self-financing at an affordable level of borrowing, so that it does not have to be restricted by the aid framework.
After the outbreak of the Greek debt crisis, since 2010, international creditors including the European Union and the International Monetary Fund have decided to provide Greece with three rounds of relief loans totaling approximately 300 billion euros, and the 86 billion euros relief project implemented in 2015 lasts for a period of time. 3 years, distributed in batches. Greece has promised to implement a series of austerity and reform measures. In the latest aid evaluation of Greece by international creditors, Greece agreed to further reduce expenditures, including measures such as reducing pensions, reforming the civil service, and selling state-owned assets.
Some analysts pointed out that Greece will rely on its own financing in the international financial market after the end of the aid. The third round of aid received by Greece should expire in August 2018 as planned, which means that Greece should be able to re-finance in the market by then. .
Since 2010, the Greek economy has shrunk by about one-third in seven years, and the unemployment rate has risen to an unprecedented high. However, the Greek economy is gradually returning to growth. Some opposition lawmakers said that although the Greek economy has shown some signs of recovery, Greece may need to accept strict supervision by international creditors until 2020.
The data shows that Greece’s current debt burden is still heavy. In 2018, the gross domestic product (GDP) will be about 185 billion euros, and the debt will still account for about 180% of GDP, which will not change much from the previous year. . In the next two years, Greece will still implement austerity measures such as tax increases and pension cuts. International creditors said that additional measures must be taken to ensure the stable growth of the Greek economy, otherwise they will not agree to amend Greece's debt repayment terms.
In order to offset the adverse effects of fiscal austerity measures on the economy, the Greek Finance Minister stated that since the outbreak of the European immigration crisis in 2015, the value-added tax of the five major islands that have been severely affected in Greece will not be increased.
Although the Greek government has introduced some measures to help boost economic growth, the opposition in the Greek parliament has been criticizing the Tsipras government’s budget, believing that the budget will drag down Greece’s economic growth. The main opposition party, the New Democratic Party, said that the new fiscal austerity measures of up to 1.9 billion euros in the budget are extremely detrimental to the people.
According to a Reuters report, Kyriacos Mizotakis, the leader of the New Democratic Party, said that Greece is the only country in the European Union to receive assistance, and that economic growth is the slowest among the euro zone countries. It is hoped that this budget will be Zip The last budget made by the Russ government.
Tsipras was elected prime minister in 2015 and has always promised to reduce fiscal austerity measures. However, shortly after his election, he reached a third round of assistance agreements with international creditors and implemented a series of new austerity measures. Tsipras’s term of office will end in 2019, and polls show that his party’s support for the radical left coalition is declining. According to Reuters, a poll conducted by the University of Macedonia in Greece last week showed that the current support rate of the New Democratic Party is 30%, which is about 12 percentage points ahead of the radical left alliance; The Democratic Party’s approval rating leads the left-wing radical coalition by 4.8 percentage points.
When Greece was deep in its debt crisis, it faced debt repayment crises several times, was on the verge of default, and triggered the risk of exiting the euro zone, posing a threat to the entire European economy. After the emergence of the debt crisis, the Eurozone has been actively thinking about how to reform to enhance its ability to respond to the economic crisis. After the election of French President Macron this year, such calls have become even stronger, and they have been supported by the President of the European Commission Juncker. Macron proposed the idea of establishing a euro zone budget and hopes to establish a savings insurance plan in Europe as a pillar of the European Banking Union.
However, currently Europe's largest economy, Germany, is facing the uncertainty of the formation of a cabinet, which also makes the euro zone economic reform policy suspicious. Germany has always advocated more austerity measures, and is unwilling to take on excessive debt risks with countries such as France, Spain, Italy, and Greece, which have heavy debt burdens.